The Appraisal Came in Low. Now What?

 

The Appraisal Came in Low. Now What?

What Arizona Buyers and Sellers Should Know Before Making Their Next Move

You've accepted an offer on your home, inspections are underway, and everything seems to be moving toward closing. Then comes an unexpected update: the appraisal came in lower than the agreed purchase price.

It's not the news any seller wants to hear, especially when you've already started planning your next move.

But a low appraisal doesn't necessarily mean the deal is falling apart. There are several ways buyers and sellers may be able to move forward.

What Does a Low Appraisal Mean?

When a buyer is financing a home, the lender typically orders an appraisal to help determine the property's value for lending purposes.

If the appraised value is lower than the agreed purchase price, the difference is called an appraisal gap.

For example, imagine you've accepted an offer of $600,000 on your Gilbert home, but the appraisal comes back at $585,000. That's a $15,000 gap.

Because lenders generally calculate the loan amount using the lower of the purchase price or appraised value, the buyer may need additional funds to complete the purchase.

A low appraisal doesn't automatically mean your home was overpriced. It simply means the appraiser's opinion of value came in below the agreed price.

Why Do Appraisals Come in Low?

Several factors can influence an appraisal, including recent comparable sales, changing market conditions, property condition, and upgrades.

In Gilbert, Chandler, Mesa, and surrounding East Valley communities, two homes in the same neighborhood can have very different features and values.

Premium lots, remodeled interiors, pools, and outdoor living spaces may help attract buyers, but those improvements don't always translate dollar-for-dollar into appraised value.

That's why understanding the comparable sales and reviewing the appraisal findings is so important.

What Are the Options?

A low appraisal doesn't always mean starting over. Depending on the circumstances, buyers and sellers may consider several solutions.

1. Renegotiate the purchase price. The seller may agree to adjust the price to help the buyer move forward with financing.
2. Cover the appraisal gap. The buyer may be willing and financially able to contribute additional funds toward the difference.
3. Meet in the middle. Both parties may agree to share the difference through a combination of a price adjustment and additional buyer funds.
4. Request a reconsideration of value. If the appraisal contains factual errors or overlooks relevant comparable sales, the buyer may request a review through their lender.
5. Review the contract. Appraisal provisions, financing terms, and contractual deadlines determine what options are available. A low appraisal does not automatically allow either party to cancel without consequences.

What Should Sellers Do First?

Before making any decisions, take time to understand the appraisal findings and discuss the situation with your real estate agent.

Consider the strength of the buyer's offer, their financing, current market conditions, and how much interest your property has received.

Would a reasonable adjustment help preserve a solid transaction? Or would returning to the market make more sense?

Every situation is different, and the best decision isn't always based on price alone.

A Low Appraisal Doesn't Have to Mean a Lost Sale

Unexpected challenges can happen during any real estate transaction. What matters is having the right information and a clear strategy for moving forward.

With thoughtful negotiations and open communication, buyers and sellers can often find a solution that keeps the transaction on track.

Thinking about selling your home in Gilbert, Chandler, Mesa, or the surrounding East Valley?

At Kelly Saggione Group | REAL Broker AZ, we're here to help you price your home strategically, evaluate offers, and navigate each step of the selling process with confidence.

Let's make your next move a well-informed one.